On May 10, 2019, the Illinois Appellate Court, First District, reversed the trial court's dismissal of an employer's two-count complaint for breach of fiduciary duty and tortious interference with prospective economic advantage. Advantage Marketing Group, Inc. v. Keane, 2019 IL App (1st) 181126 (First District May 10, 2019). The First District held that the employer's complaint stated causes of action against the employee for breach of fiduciary duty and tortious interference, even though the employee was not an officer or director of the company. The employer alleged that the employee breached his fiduciary duty to the employer when he allegedly failed to disclose and misappropriated a corporate opportunity to purchase a competing business. Under Illinois law, an employee owes fiduciary duties to his or her employer, which arise from the employment relationship. These include the duties of loyalty and fidelity as well as the duty to avoid self-dealing at the expense of the employer.
On April 2, 2019, the Illinois Appellate Court, Second District, reversed the trial court's order of summary judgment in favor of the defendant-employer in an employment discrimination lawsuit under the Illinois Human Rights Act ("IHRA"), in which the plaintiff-employee claimed that her employer unlawfully discriminated against her because of her sex, race, national origin, and age, and unlawfully retaliated against her for complaining about it. Lau v. Abbott Laboratories, 2019 IL App (2d) 180456 (Second Dist. April 2, 2019). The IHRA is an Illinois anti-discrimination statute that contains the same employee protections as the federal anti-discrimination statutes (as well as some additional protected classifications that are not covered by the federal laws). Illinois courts interpreting the IHRA are guided by federal case law interpreting the federal anti-discrimination laws. The same legal standards and proof paradigms apply.
On March 29, 2019, the Illinois Appellate Court, First District, upheld the rule that continued employment for less than two years does not constitute adequate consideration to support noncompetition or nonsolicitation provisions contained in Illinois at-will employment contracts. Axion RMS, Ltd. v. Booth, 2019 IL App (1st) 180724 (First Dist. March 29, 2019). This is the so-called "two-year rule," established by the Illinois Appellate Court, First District, in its decision in Fifield v. Premier Dealer Services, Inc., 2013 IL App (1st) 120327, which remains fluid and controversial, because the Illinois Supreme Court has not decided the issue. Consequently, federal district court judges may, but are not required to follow the "two-year" rule when determining the enforceability of noncompetition or nonsolicitation agreements under Illinois law. Federal judges in the U.S. District Court for the Northern District of Illinois have split on the issue--some follow the bright-line "two-year rule," while others determine the enforceability of employment restrictive covenants based upon the totality of the circumstances.
On March 11, 2019, the Illinois Appellate Court, First District, held that under Illinois law, a successor business entity may be liable for an employment discrimination claim against an employer that transferred its assets to the successor in order to avoid liability for the employment discrimination claim. Illinois Department of Human Rights v. Oakridge Nursing & Rehab Center, et al., 2019 IL App (1st) 170806, March 11, 2019. The employee filed an age and disability discrimination charge (the "Charge") against his employer under the Illinois Human Rights Act ("IHRA"). After the employer received notice of the Charge, it transferred substantially all of its assets to a related but separate business entity. Subsequently, a judgment in the amount of $30,000 was awarded by the Illinois Human Rights Commission to the employee and against the employer, which the employer failed to pay.
On February 20, 2019, the U.S. Court of Appeals for the Seventh Circuit affirmed an order of summary judgment in favor of a defendant-employer on an Illinois common law retaliatory discharge claim. Walker v. Ingersoll Cutting Tool Company, No. 18-2673 (7th Cir. Feb. 20, 2019). The employer discharged the employee after he was involved in a physical altercation with another employee. He sued the employer, alleging race discrimination under Title VII and retaliatory discharge under Illinois law. The district court granted summary judgment for the employer on all claims. On appeal, the plaintiff abandoned his Title VII racial discrimination claim. The retaliatory discharge claim failed for lack of evidence of a causal connection between any protected activity and the plaintiff's discharge.
On January 29, 2019, the U.S. Court of Appeals for the Seventh Circuit affirmed an order of summary judgment in favor of a defendant-employer in a lawsuit alleging violations of Title VII of the Civil Rights Act of 1964 ("Title VII") and the Illinois Human Rights Act ("IHRA"), in which the plaintiff-employee claimed that the employer failed to promote, disciplined, and demoted him because of his race and national origin, and in retaliation for his previous internal complaints of employment discrimination and workplace harassment. Cervantes v. Ardagh Group, No. 17-3536 (7th Cir. Jan. 29, 2019). His discrimination claims failed because he did not exhaust his administrative remedies. His retaliation claim failed because he did not engage in protected activity, and there was no evidence of any causal connection between any protected activity and the adverse employment actions.
On December 11, 2018, the Illinois Appellate Court, Third District, declined to establish a per se standard of reasonableness for the temporal scope of employment-based restrictive covenants, indicating that reasonableness must be determined based upon the totality of the facts and circumstances of each individual case. Pam's Academy of Dance/Forte Arts Center v. Marik, 2018 IL App (3d) 170803 (12/11/2018). In this case, the plaintiff alleged two counts of breach of an employment contract and a third count for breach of the Illinois Trade Secrets Act. The plaintiff alleged that the defendant, a former employee, breached their employment non-disclosure and restrictive covenant agreement by opening a dance studio within 25 miles of the plaintiff's studio and soliciting students and teachers through an improperly-obtained customer list.
On October 11, 2018, the 7th Circuit affirmed an order of the district court which dismissed an Illinois common law tort claim for tortious interference with an employment contract for failure to state a claim upon which relief may be granted pursuant to Fed.R.Civ. P. 12(b)(6). Webb v. Frawley, No. 18-1607 (7th Cir. 10/11/2018). The plaintiff sued a former co-worker for tortiously interfering with his employment contract, claiming that the interference resulted in the termination of his employment. The district court granted the defendant's motion to dismiss. The plaintiff alleged that the defendant intentionally induced a breach of his employment contract by his employer--the termination of his employment--by ordering him to pursue business that his employer refused to fulfill, and by reporting to his employer that he was not performing. The plaintiff claimed that the defendant did so in an attempt to resurrect or save the defendant's commercial reputation. The plaintiff was advised that his employer had terminated his employment for poor performance and a lack of productivity.
On December 12, 2018, the 7th Circuit affirmed the district court's dismissal of a lawsuit filed by a group of flight attendants, who alleged that their employer's compensation policy--paying for their work in the air but not on the ground--violated the federal Fair Labor Standards Act ("FLSA") and various state and local wage laws. Hirst et al. v. SkyWest, Inc., et al., Nos. 17-3643 & 17-3660 (7th Cir. 12/12/2018). The district court dismissed the complaint in its entirety, finding that the flight attendants had failed to allege a FLSA violation. The fight attendants plausibly alleged that they were not paid for certain hours of work. However, the 7th Circuit agreed with the other federal circuits, that under the FLSA, the relevant unit for determining a wage violation is not wages per hour, but the average hourly wage across a workweek. Because the flight attendants failed to allege even a single workweek in which one them received less than the applicable minimum wage, the 7th Circuit affirmed the dismissal of their FLSA claims.
On September 11, 2018, the 7th Circuit issued an opinion in which it explained the joint employer doctrine and reversed the district court's decision on summary judgment that an employer management services company was not a joint employer of the plaintiff-employee in her sexual harassment, retaliation, and pregnancy discrimination lawsuit against multiple separate companies. Frey v. Hotel Coleman, et al., No.17-2267 (7th Cir. 9/11/2018). This case presented issues regarding the employer-employee relationship that arise in the increasingly common scenario in which one employer hires another entity to manage the day-to-day operations of an enterprise. One entity provides the paycheck but another entity manages the tasks typically associated with an employer, such as hiring, firing, training, supervising, and evaluating employees. In this case, a hotel hired a management company to handle its daily operations. Under the hotel management agreement, the management company was responsible for hiring, supervising, directing, and discharging employees, and determining the compensation, benefits, and terms and conditions of their employment. The hotel agreed that it would not give direct instructions to any employee of the hotel or the management company that may interfere, undermine, conflict with or affect the authority and chain of command established by the management company. The plaintiff and other staff members who worked at the hotel were on the hotel's payroll, and the management agreement stated that all personnel are in the employ of the hotel.